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The following press release was issued by ADT on May 9, 1997:
FOR IMMEDIATE RELEASE
ADT Limited ("ADT")
ADT ANNOUNCES FIRST QUARTER 1997 EARNINGS PER SHARE UP 40 PER CENT TO $0.28
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Hamilton, Bermuda, May 9, 1997 -- ADT Limited (NYSE - ADT), through its
subsidiaries, a leading provider of electronic security and vehicle auction
services, announced today that net income, before non-recurring items, for the
three months ended March 31, 1997 was 54 per cent higher at $44.6m (1996 -
$28.9m) on net sales increased by 12 per cent to $460.7m (1996 - $411.3m).
Fully diluted earnings per common share, before non-recurring items, were
40 per cent higher at $0.28 (1996 - $0.20).
The weighted average number of common shares outstanding during the first
quarter of 1997 was 173.7m (1996 - 163.6m).
Commenting, Mr. Michael A. Ashcroft, Chairman and Chief Executive Officer of
ADT, said:
"First quarter results were very encouraging, demonstrating the strength of
the ADT brand."
"ADT Security Services' commercial business in the United States had a very
good first quarter, benefiting from marketing initiatives taken in the
previous quarter, as well as from a stronger market."
"ADT's residential business also continued to grow strongly with unit sales of
approximately 88,000 in the first quarter, compared with 75,000 in the fourth
quarter of 1996. Growth in the residential business has been fueled by ADT's
strategy of establishing multiple channels of distribution and, in the first
quarter, ADT added to its strategic alliances with the announcement of a joint
marketing agreement with AT&T Corporation."
"ADT Automotive also had another record quarter with the conversion ratio up
2.6 per cent on vehicle sales 14 per cent higher than in the first quarter of
1996."
"ADT's agreed transaction with Tyco International Ltd., which was announced in
the first quarter, will create a major force in fire and safety services,
enhancing ADT's ability to grow, not only in North America and the United
Kingdom, but in all parts of the world utilizing Tyco's established
infrastructures in more than 50 countries worldwide."
Electronic Security Services
Net sales and operating income from the Electronic Security Services division
for the three months ended March 31, 1997 amounted to $373.7m and $65.7m,
respectively, representing increases of 11 per cent and 25 per cent,
respectively, over the first quarter of 1996.
ADT's total annualized service revenues as of March 31, 1997, were
approximately $955m representing an annualized growth rate of approximately 15
per cent.
National Accounts/Core Commercial
All segments of ADT's commercial business experienced good growth in the first
quarter, particularly CCTV and Access Control. Sales to the public sector,
including the US Marshals Service and the General Services Administration, led
the growth in National Accounts. Small business and traditional product lines
drove growth in the core commercial business where buyer preferences trended
towards ADT-owned systems. Successes during the quarter included three CCTV
contracts from Crown Books; becoming the exclusive provider of security and
fire alarm services to Mercantile Stores, a specialty retailer with 186
locations; pioneering a new standard of pharmacy protection for Revco; and
significant new CCTV and intruder alarm installations for Home Shopping
Network, an ADT customer since 1994. Strong proposal activity reflects an
upturn in market demand and suggests that growth in commercial sales will
continue in the second quarter.
In Canada, ADT has entered into an agreement for joint marketing to small
businesses with the seven Canadian Bell operating companies which is expected
to result in substantial lead generation for the commercial sales force. In
addition, a telemarketing program has been launched with Telus, the Bell
operating company in Alberta, to generate new residential business and the
program is now being expanded to include Ontario.
In the United Kingdom, where ADT provides security services for major
companies ranging from Barclays to Texaco, sales of CCTV and Access Control
systems were strong and high levels of CCTV and Access Control growth are
expected to continue in 1997. Significant new contracts during the first
quarter included an order for a CCTV system for High Down high security prison
and ADT is currently launching a major new marketing initiative in the field
of school security where it is already an acknowledged expert with over 6,000
schools currently employing the expertise of ADT companies.
Residential
During the first quarter, ADT contracted to install and monitor 88,000 new
residential security systems, compared with 75,000 in the fourth quarter of
1996. ADT's residential customer base is now in excess of 1.2 million, more
than 85 per cent of which is located in the United States.
Competition in the residential marketplace continues to put pressure on
installation revenues for basic security systems. However, new lifestyle
enhancing services introduced by ADT during the first quarter, such as remote
"keyfob" access to installed security systems, and pagers equipped to send a
signal when a code is entered into the home system, are helping to counteract
some of the pricing pressure. One application of the paging feature is
directed towards latchkey children and is another example of ADT's commitment
to meeting customers' needs.
The ADT authorized dealer program continues to be an important source of new
customers and ADT now has 128 dealers throughout the United States. Along with
ADT's affinity relationships with RadioShack, USAA Insurance and CENTURY
21/ERA/Coldwell Banker (franchisees of HFS Incorporated), the dealer program
has resulted in a more balanced distribution strategy and, together, these
channels of distribution contributed approximately 30 per cent of residential
unit sales in the first quarter. The newest joint marketing agreement, with
AT&T, which was announced in early March, will further support residential
sales when AT&T and ADT begin marketing joint product and service offerings in
the third quarter of 1997.
Vehicle Security and Tracking
The marketing of CarCop to ADT residential customers in a combined home and
vehicle security service has begun in a first of a kind program. In addition,
commercial fleet opportunities are being pursued both directly and through
ADT's commercial sales force.
Vehicle Auction Services
Net sales and operating income from the United States Vehicle Auction division
for the three months to March 31, 1997 amounted to $87.0m and $15.4m,
respectively, representing increases of 17 per cent and 43 per cent,
respectively, over the first quarter of 1996.
The total number of vehicles sold at ADT Automotive auctions in the first
quarter reached an all-time record of 310,000, an increase of approximately 14
per cent over the first quarter of 1996. The fleet/lease sector accounted for
the majority of this with a 26 per cent increase in the number of vehicles
sold. Sales of manufacturers' vehicles however also increased by 18 per cent
in the quarter.
The first ADT LION electronic sale for Toyota was held during the quarter and
was a significant success with 83 per cent of the entry being sold. ADT
Automotive has recently published its 1997 Used Car Market Report which is now
regarded as an important source of industry data.
Background
ADT, through its subsidiaries, is the largest single provider of electronic
security services in both North America and the United Kingdom, providing
continuous monitoring of commercial and residential security systems to over
1,800,000 customers in North America and Europe.
ADT is also the second largest provider of vehicle auction services in the
United States, operating a network of 27 vehicle auction centers providing a
comprehensive range of vehicle remarketing services to vehicle dealers and
owners and operators of vehicle fleets.
Forward Looking Information
Certain statements in this press release constitute "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. In particular, statements contained herein regarding expectations
with respect to future sales, operating efficiencies and product expansion are
subject to known and unknown risks, uncertainties and contingencies, many of
which are beyond the control of ADT, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. Factors that might affect such forward looking
statements include, among others, overall economic and business conditions,
the demand for ADT's services, competitive factors in the industry, regulatory
approvals and uncertainty about the consummation of future acquisitions.
Contact:
ADT Johnnie D. Johnson & Co., Inc
561-988-3600 212-425-4848
Note:
This and other ADT press releases are available through Company News On-Call
by fax; call 800-758-5804, extension 112511, or at http://www.prnewswire.com.
ADT LIMITED
Summarized Consolidated Statements of Income (unaudited)
Three months ended March 31 1997 1996
$m $m
Net sales 460.7 411.3
Cost of sales (239.3) (221.5)
Selling, general and administrative
expenses (145.9) (131.3)
Non-recurring items - transaction costs* (9.6) (0.6)
Charge for the impairment of
long-lived assets - (744.7)
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Operating income (loss) 65.9 (686.8)
Interest expense - net (16.7) (20.9)
Other expenses less income - (0.3)
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Income (loss) before income taxes 49.2 (708.0)
Income taxes (14.2) 2.4
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Net income (loss) 35.0 (705.6)
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Fully diluted earnings (loss)
per common share $ $
Before non-recurring items 0.28 0.20
Non-recurring items (0.06) (5.40)
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Net income (loss) per common share 0.22 (5.20)
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* Represents first quarter 1997 costs related to the ADT-Tyco transaction and
the unsolicited proposals by Western Resources.
ADT LIMITED
Summarized Consolidated Balance Sheets (unaudited)
March December
31, 1997 31, 1996
$m $m
Assets
Current assets:
Cash and cash equivalents 492.0 215.9
Accounts receivable - net 318.7 210.7
Inventories 41.3 39.2
Prepaid expenses and other current assets 66.8 117.0
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Total current assets 918.8 582.8
Property, plant and equipment - net 1,527.6 1,513.6
Goodwill and other intangibles - net 476.6 458.0
Long-term investments 100.6 100.6
Other long-term assets 70.8 75.4
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Total assets 3,094.4 2,730.4
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Liabilities and shareholders' equity
Current liabilities:
Short-term debt 74.3 209.2
Accounts payable 173.8 138.0
Other current liabilities 267.8 293.6
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Total current liabilities 515.9 640.8
Long-term debt 1,057.1 910.1
Deferred revenue 163.2 146.1
Deferred income taxes 102.1 91.5
Other long-term liabilities 169.3 182.1
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Total liabilities 2,007.6 1,970.6
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Shareholders' equity 1,086.8 759.8
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Total liabilities and shareholders' equity 3,094.4 2,730.4
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ADT LIMITED
Summarized Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31 1997 1996
$m $m
Cash flows from operating activities
Net income (loss) 35.0 (705.6)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Charge for the impairment of long-lived assets - 744.7
Depreciation and amortization 57.8 52.9
Interest on ITS Vendor Note (2.5) (2.1)
Liquid Yield Option Notes discount amortization 5.3 5.0
Deferred income taxes 11.5 (4.9)
Gain on disposal of investment in associate - (1.2)
Loss on currency transactions 2.4 1.7
Other (0.5) 0.8
Changes in assets and liabilities (59.1) (39.0)
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Net cash provided by operating activities 49.9 52.3
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Cash flows from investing activities
Purchase of property, plant and
equipment - net (100.5) (75.5)
Acquisition of businesses (6.1) (20.6)
Purchase of customer contracts (17.7) (3.9)
Proceeds from litigation settlement 77.5 -
Disposal of investment in and loans to
associate - 15.4
Other (1.9) 1.5
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Net cash utilized by investing activities (48.7) (83.1)
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Cash flows from financing activities
Net (repayments) receipts of short-term debt (168.3) 8.9
Repayments of long-term debt - (15.0)
Proceeds from long-term debt 141.8 6.0
Proceeds from issue of common shares 303.1 4.6
Other (1.9) -
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Net cash provided by financing activities 274.7 4.5
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Effect of currency translation on
cash and cash equivalents 0.2 (0.6)
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Net increase (decrease) in cash and
cash equivalents 276.1 (26.9)
Cash and cash equivalents at
beginning of period 215.9 350.9
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Cash and cash equivalents at end of period 492.0 324.0
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- Ends -
